The Future of the Offshore Drilling Industry to 2015 - Market Analysis, Capital Expenditure and Competitive Landscape

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Nov 8, 2013 (3 years and 11 months ago)

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GBIGE00026MR /Published FEB 2010
Page 1
The Future of the Offshore Drilling Industry to 2015 - Market
Analysis, Capital Expenditure and Competitive Landscape
© GBI Research. This is a licensed product and is not to be photocopied
The Future of the Offshore Drilling Industry to 2015 - Market
Analysis, Capital Expenditure and Competitive Landscape

Reference Code: GBIGE00026MR

Publication Date: February 2010

GBI Research’s new report “The Future of the Offshore Drilling Industry to 2015 - Market
Analysis, Capital Expenditure and Competitive Landscape” provides an in-depth analysis of the
offshore drilling industry and highlights the various concerns, shifting trends and emerging regions
in the global offshore drilling industry. The report provides forecasts on the offshore drilling
expenditure to 2015. The report includes exploratory and development drilling expenditure
forecasts to 2015. The report also provides an in-depth analysis of the key trends and challenges in
the global drilling industry. The report also discusses the major offshore projects globally and
provides an analysis of the competitive scenario in each of the geographies. The report is built
using the data and information sourced from proprietary databases, primary and secondary
research and in-house analysis by GBI Research’s team of industry experts.
Global Offshore Drilling Expenditure is Expected to Grow to More Than
$490 Billion in the Period from 2009 to 2015
The global offshore drilling expenditure has increased in recent years especially during the period
from 2004 to 2008. According to GBI Research’s estimates, approximately $350 billion was spent
on offshore drilling from 2000 to 2008. The regions accounting for the major share of the spending
were the US Gulf of Mexico (USGOM), West Africa, Brazil and Asia Pacific. The offshore drilling
expenditure peaked in 2007- 2008.
The global drilling expenditure is forecast to grow at an annual average growth rate of about 6.6%
in the forecast period of 2009 to 2015. The depletion of the reserves in onshore and shallow waters
and the advancement in seismic and drilling technologies are driving the increased drilling activities
in deepwater offshore regions. This trend is most visible in the offshore areas of the USGOM, Brazil
and West Africa. The discovery of deep water and subsalt reserves is expected to drive
investments in the sector.
As a result of the increasing demand and the decline of the reserves of crude oil and natural gas,
the prices of crude oil and natural gas are expected to continue to rise. However, factors such as
decreases in service costs as the offshore regions mature, and advances in technology leading to
increased efficiency and a reduction in extraction costs, will combine to reduce the total
investments. Nonetheless, the positive factors leading to increases in investments are likely to
outweigh the negative factors, thereby significantly increasing the offshore drilling expenditure in
the future.




GBIGE00026MR /Published FEB 2010
Page 2
The Future of the Offshore Drilling Industry to 2015 - Market
Analysis, Capital Expenditure and Competitive Landscape
© GBI Research. This is a licensed product and is not to be photocopied
Global Offshore Drilling Expenditure in $ Bn, 2000-2015


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Year
North America
South and Central America
Europe
Middle East and Africa
Asia Pacific

Source: GBI Research

South and Central America is Expected to be One of the Top Regions for
Offshore Drilling Expenditure by 2015
Advances in technology and recent increased in commodity prices have lead to increased
exploration in the offshore areas of South and Central America. Increased exploration has lead to
some significant discoveries in the offshore regions. Brazil is the most promising region in South
and Central America for offshore activity. Brazil is emerging as one of the most important offshore
drilling markets in the world due to the discovery of huge reserves in the offshore regions of Brazil.
Brazil’s offshore crude oil reserves were 11,744.3 million barrels in 2008. New discoveries such as
the Tupi field and the Azulao field are expected add significant reserves during the forecast period.
These discoveries have demonstrated the presence of vast reserves of crude oil in the offshore
regions of Brazil and are expected to attract a greater share of the future offshore drilling
expenditure. Other countries, such as Venezuela, Peru, and Trinidad and Tobago, are also
witnessing offshore activity, although to a smaller extent than in Brazil. According to GBI
Research’s estimates, offshore drilling expenditure in South and Central America totaled more than
$55 billion from 2000 to 2008 with Brazil accounting for more than $45 billion of this. Further, South
and Central America is estimated to attract close to $100 billion in the period from 2009 to 2015.
Brazil alone is expected to attract a drilling spend of more than $80 billion in the offshore regions
during the period from 2009 to 2015. The discovery of significant new offshore fields is expected to
boost the growth of the drilling market in the region. With Brazil expected to become one of the
major crude oil suppliers in the next decade and with most of Brazil’s production coming from
offshore areas, the drilling spend in Brazil is expected to increase significantly thereby increasing
the overall expenditure in the South and Central American region.




GBIGE00026MR /Published FEB 2010
Page 3
The Future of the Offshore Drilling Industry to 2015 - Market
Analysis, Capital Expenditure and Competitive Landscape
© GBI Research. This is a licensed product and is not to be photocopied
South and Central America Offshore Drilling Expenditure in $ Bn, 2000-2015


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Year

Source: GBI Research

Increasing Trend Towards Deep and Ultra Deep Water Exploration and
Production is Driving the Growth of the Offshore Drilling Industry
In recent years, there has been an increasing trend towards deep and ultra deep water exploration.
With the decline in the available resources in the onshore areas, there has been a marked shift
towards increased offshore exploration. Initially, the offshore exploration was mainly in shallow
waters. However, in recent years, with the near complete exploitation of the shallow water
resources worldwide, companies have begun drilling deeper in the oceans.
There have been huge deep water discoveries in various regions of the world, from Brazil, the
USGOM to West Africa and the Asia Pacific region. In the USGOM there has been decreased
activity in the shallow water areas. Natural gas production, which was the mainstay of the shallow
water activity in the USGOM, has seen a steady decline in recent years. As offshore natural gas
production is expected to decline in the USGOM, shallow water activity is expected to decrease.
Also, shallow water operations are more likely to be affected by the economic downturn than the
deep water areas, since the lease arrangements for the deepwater areas are typically longer and
projects take more time to develop. Another major factor promoting the increased activity in the
deep and ultra deep waters has been the advancement of technology. Perdido development
operated by Shell is a classic example of advances in technology being put to good use. Perdido
will be the deepest production platform in the world operating at depths of 8,000 feet under water.
Petrobras’ FPSO, which will be introduced next year, is a converted double-hulled tanker that can
operate at extreme water depths and also will have a detachable turret buoy to be used during
hurricanes while the FPSO can be moved to safer waters.
These and other factors have been mainly responsible for companies reaching previously
unreachable areas. Subsalt reserves, which are typically petroleum reserves thousands of meters
below layers of sand and rocks and salt, contain huge reserves of oil. Recent sub-salt discoveries
have transformed Brazil into a country with one of the highest potential investment acreages
globally. Tupi Field, which was discovered in November 2007, is the largest discovery in the
Americas since 1970. It has estimated recoverable reserves of 5-8 billion barrels. This discovery in
the pre-salt layer, which extends from the State of Espírito Santo to the State of Santa, is
considered to be one of the most attractive exploration acreages worldwide. It will increase Brazil’s
recoverable reserves of crude oil by 50%, which will significantly increase the revenues of the




GBIGE00026MR /Published FEB 2010
Page 4
The Future of the Offshore Drilling Industry to 2015 - Market
Analysis, Capital Expenditure and Competitive Landscape
© GBI Research. This is a licensed product and is not to be photocopied
country’s oil and gas industry. Geological similarities between the subsalt ares in Angola and Brazil
have increased the hopes of finding huge subsalt reserves in the continental shelf areas of Angola.
As shallow water resources decrease, deep and ultra deep subsalt areas will play an increasing
role in offshore oil and gas production. As the exploration and production activity moves into deeper
water, offshore drilling contractors, especially major and technically strong companies, will grow
strongly.



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